Zhongwang looks overseas for growth
Updated: 2012-02-07 09:50
By Du Juan (China Daily)
SHENYANG - China Zhongwang Holdings Ltd, the world's second-largest manufacturer of aluminum extrusion products by volume, has set a goal of increasing the volume of its exports to the United States by fivefold in 2012, indicating the company's ambition to strengthen its overseas business.
Workers at a factory owned by China Zhongwang Holdings Ltd. The manufacturer of aluminum extrusion products is planning to increase its exports to the US market fivefold this year. [Photo/China Daily]
The company will sell up to 50,000 tons of aluminum products overseas this year, mainly to the US, said Chief Financial Officer Vincent Cheung when he spoke to reporters in the city of Liaoyang on Saturday. The percentage of overseas sales in the company's total sales is expected to grow from 2 percent in 2011 to more than 10 percent this year.
"We are now discussing with our US clients how to adjust our product types for the US market, which will help us to avoid anti-dumping and anti-subsidies duties on Chinese aluminum products," said Cheung.
In March 2010, the US Department of Commerce started anti-dumping and anti-subsidies investigations into Chinese aluminum products. The department decided to impose anti-dumping tariffs of 33.28 percent and anti-subsidies tariffs of 374.15 percent on several types of Chinese aluminum exports to the US in March 2011.
The moves have hurt Chinese exports. In 2009, Zhongwang's sales revenue in the US market was 5.66 billion yuan ($897 million), accounting for 40.8 percent of the company's total revenue. The company's sales revenue dropped to 3.07 billion yuan in 2010, a year-on-year decline of 29.1 percent. The shortfall was, in part, a result of the probe.
However, the company moved quickly to adjust its marketing strategies and product types to maintain growth in 2011. According to its report, China Zhongwang had realized revenue of 6.63 billion yuan by the end of the third quarter last year, an increase of 52 percent over the same period in 2010.
In the coming years, the company will concentrate on the domestic market, which will be supplemented by overseas sales, and will increase its efforts to develop high-value-added products, said Lu Changqing, executive deputy-president.
He said flat-rolled aluminum products will be the new growth area for the company.
China Zhongwang will spend $3.8 billion to buy equipment to manufacture flat-rolled products. Commercial production is expected to start in 2014, with an annual production capacity of 1.8 million tons. The company said the location of the production line has already been decided, but didn't disclose further details.
A recent report from Boston Consulting Group said that global consumption of flat-rolled aluminum products will increase from 15.6 million tons in 2009 to 28 million tons in 2020. China, as the world's fastest-growing market for flat-rolled products, will consume 14 million tons of the material in 2020, accounting for as much as half of global consumption.The country used 5.9 million tons in 2009, according to the report.
Flat-rolled aluminum products are mainly used in the manufacture of automobiles and cans. Cheung said China depends largely on imports, with approximately 600,000 tons imported every year, and domestic producers mainly provide low-end products.
"So, Zhongwang will explore this market, and try to replace imports," he said. "In addition to lower prices, we also have other advantages such as advanced equipment and a large customer base in the auto and transport areas compared with foreign producers."
Aluminum Corp of China Ltd, the nation's biggest aluminum producer by volume, is currently the largest manufacturer of flat-rolled aluminum products. Only about five companies in China have a production capacity of more than 100,000 tons, but that is unable to supply the growing domestic demand, especially for high-end products.
The huge investment required is the main obstacle for manufacturers of flat-rolled products, but Zhongwang said it doesn't have any plans to raise funds through equity sales.